your going from hd to sd, so you are going to lose resolution. you are also going from progressive to interlaced, so that will also degrade the image quality (the flicker is likely due to the interlacing, but its always hard to say for sure without being able to see it).
in addition, composite is a pretty low quality analog connection, so that too is probably causing some image quality issues from what you see on the pc vs the tv.
in short, i wouldn't trust what you are seeing on tv. are you testing this on the tv because that's the final destination? if so, what is the final delivery format (file, dvd, tape...)?